Best performing tax-saving funds

By Ravi Samalad |  20-01-22 | 
 
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About the Author
Ravi Samalad is Assistant Manager - Editoral for Morningstar.in.

The Equity Linked Savings Scheme (ELSS) is one of the popular products to save tax under Section 80C. We looked at the performance of ELSS funds over three- year, five-year ten year period on a rolling return basis.

Rolling returns offer a useful lens into a fund's fuller return history and can help investors see through the haze caused by the latest data.

Performance

Three Year (1-year daily rolling return)

Of 41 funds, 11 funds outperformed BSE 500 TRI as of January 17, 2021. BSE 500 TRI delivered 26.27% during this period.

             

Five Year (3-year daily rolling return)

Over a five-year period too, 11 funds outperformed BSE 500 TRI as of January 17, 2021. BSE 500 TRI delivered 9.82% during this period.

Ten Year (3-year daily rolling return)

Over a ten-year period, 17 funds outperformed BSE 500 TRI as of January 17, 2021. BSE 500 TRI delivered 13.20% during this period.

Among the funds that have completed ten years, five funds have outperformed over  3-year, 5-year and 10-year period. They are Canara Robeco Equity Tax Saver, DSP Tax Saver, JM Tax Gain, BOI AXA Tax Advantage and Quant Tax Plan.

ALSO READ: Most Popular ELSS Funds

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Ravi Samalad
Jan 24 2022 04:59 PM
 Hi Mr. Kishore,

Thanks for sharing your thoughts.

The returns that were shown in the article are rolling returns as opposed to trailing returns which you are referring to. Hence, trailing returns will be higher if there has been recent outperformance.

Rolling returns is a better measure of a fund's consistency of return as it represents an average performance over multiple 3-year periods, and it is not biased by recent performance.

Hence, you will always find the trailing return and rolling return of a fund different.

We have not ignored any schemes as it driven purely by data. The filter to shortlist these schemes is purely performance and not AUM. The AUM of quant Tax Plan and PPFAS Tax Saver is comparatively smaller than other funds in the industry.

Sundaram Long Term Micro Cap Tax Advantage Fund - Series VI , V, IV , III, etc (These are close-ended schemes). We have only considered open-end schemes for this study. Hence, Sundaram LTMCTAF was excluded.

Trust this clarifies.

Regards
Ravi
Kishore K K
Jan 22 2022 04:26 PM
 Mr Ravi,

Reg. Performance only :

1. For the past 30 years or more, we have been seeing the aforesaid calculations based on Lumpsum investments regularly. Thus there is nothing new in your article.

2. You better try to present analysis based on SIP Investments either in ELSS or in the other schemes............... For instance, for SIPs in ELSS, you go through the contents of the following weblink :

https://www.moneycontrol.com/mutual-funds/performance-tracker/sip-returns/elss.html

(a) The SIP returns for Quant Tax plan for 3yrs was 109.62 as against 52.02% as shown in your article. Similar types of VAST DIFFERENCE and CONTRAST are FOUND for many other ELSS schemes.

(b) Secondly, Some of the Best-performing ELSS Schemes like SBI Longterm Advantage Fund as well as Sundaram Long Term Micro Cap Tax Advantage Fund - Series VI , V, IV , III etc. were IGNORED by you.

Only when you consider all the ELSS Schemes after ignoring their respective AUMS, the correct and precise picture will emerge.

Lastly, it is obvious that , ff such SIP data shown, the employees will be MORE and MORE motivated to go for ELSS in general ; and for SIP paymentss in particular.

With our best wishes,
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